Since 1 January 2021, businesses registered for VAT that import goods into the UK from anywhere in the world can use a new system called postponed VAT. This lets traders account for the VAT on their VAT Return, rather than paying it immediately (e.g. at the time of import/entry).
The postponed VAT accounting system aims to avoid the negative cash flow impacts on businesses that are hit by this additional VAT bill and will avoid having goods held in customs until the VAT is paid.
Rather than physically paying import VAT and then reclaiming it on the subsequent VAT return, the VAT is accounted for as input and output VAT on the same return.
HMRC and Irish Revenue will issue monthly C79 reports stating the VAT amounts that have been postponed so that traders can easily identify the amounts that need to be declared on their VAT returns.
HMRC have confirmed that the following boxes must be completed on the VAT returns.
Box 1 – VAT due on sales and other outputs: Include the VAT due in this period on imports accounted for through postponed VAT accounting.
Box 4 – VAT reclaimed on purchases and other inputs: Include the VAT reclaimed in this period on imports accounted for through postponed VAT accounting.
Box 7 – Total value of purchases and all other inputs excluding any VAT: Include the total value of all imports of goods included on your online monthly statement, excluding any VAT.
PVA is an optional scheme for traders and if they wish they can pay the VAT upfront when the goods are imported into free circulation. It is mandatory however if a trader decides to defer the submission of their customs declarations – such as making use of the initial six-month customs deferment period after the end of the transition period.
In relation to Northern Ireland, as it remains a part of both both the United Kingdom and the European VAT area, Northern Ireland will have a unique VAT and customs arrangements.
All imports from the EU into Northern Ireland will be treated as Intra-Community suppliers and acquisitions, and therefore PVA can not be used. Goods moving between Northern Ireland and the rest of the UK are to be treated as domestic sales and purchases and once again PVA can’t be applied as these movements are not subject to import VAT.
For shipments being imported from any country outside the EU and the UK, traders will be able to use PVA.
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